Is the IRS Getting Too Aggressive?

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The number of IRS agents has doubled in the past year. New laws are coming fast and furious. And the IRS is sending out notices right and left. Most of them seem to be wrong.

Is the IRS getting too aggressive? And, more importantly, what can you do about it? Here are three steps you can take now.

(1) Don’t put a big red target on your back.

Know what the IRS is targetting. These are things like Sole Proprietorship (Schedule C), wrong business forms and wrong disclosures. Silly mistakes can cost you big time! This is probably the worst time ever to try to do-it-yourself with your tax filing.

(2) Be careful how you get your information.

The Internet can be your worst enemy when it comes to tax research. All kinds of people are posting bad advice and, probably worst of all, the Internet remembers everything. Things I posted in 2005 are quite likely wrong today. If the date on an article isn’t current, don’t believe it.

I recently went round and round with a lady over something she’d read on the IRS website. First of all, the IRS specifically states that you can not really on the advice you get when you call them. That should be your first sign of trouble. Then, if you pull up a publication that tells you how to do something, you better make sure that you know when it was written. In this case, the pub had, on the first page, a notice that the IRS would not be updating the publication. It was almost 4 years out of date!

I wish I had the 4 hours it took me to convince this lady she was wrong. (I have to rethink the type of discussions I want to spend my time on.)

(3) Be ready with good records.

You only get one time to make a first impression. That’s especially important if you get called into an audit. You want impeccable records. That can go a long way to getting a quick and relatively painless end to your audit.

So, is the IRS getting too aggressive? Probably. But, I don’t think we’re going to see any change in this current economic situation.

One Comment

  1. I am a CPA in the Northwest. I have had more Schedule C audits in the last year (I try to get them all in a Sub S – I really do) than I have in the past 24 years. The best news – they came out fine due to documentation. All had large losses. One was a vacation rental that showed over $40,000 in losses for the first two years – but everything was documented perfectly.

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